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QUESTION 14 A company purchases supplies on account, what is the effect on the accounting equation? Assets decrease; equity increases Assets decrease; equity decreases Liabilities

QUESTION 14

  1. A company purchases supplies on account, what is the effect on the accounting equation?

    Assets decrease; equity increases

    Assets decrease; equity decreases

    Liabilities decrease; equity decreases

    Liabilities increase; equity increases

    Liabilities increase; assets increase

4 points

QUESTION 15

  1. Unearned revenues are:

    Revenues that have been earned and received in cash

    Revenues that have been earned but not yet collected in cash

    Liabilities created when a customer pays in advance for products or services before the revenue is earned

    Recorded as an asset in the accounting records

    Increases to retained earnings

4 points

QUESTION 16

  1. A debit is:

    An increase in an account

    The right-hand side of a T-account

    A decrease in an account

    The left-hand side of a T-account

    An increase to a liability account

4 points

QUESTION 17

  1. Acme Company had equity of $55,000 at the end of the current year. During the year the company had a $2,000 net loss and investments by owners in exchange for stock of $7,000. Compute equity as of the beginning of the year.

    $5,000

    $46,000

    $50,000

    $52,000

    $64,000

4 points

QUESTION 18

  1. If Beginning Retained Earnings was $184,300, the company distributed $46,000 in dividends and Ending Retained Earnings was $345,000, what was the net income for the period?

    $154,700

    $206,700

    $114,700

    $575,300

    $160,700

4 points

QUESTION 19

  1. In which of the following situations would the trial balance not balance?

    A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash

    The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable

    A $50 cash receipt for the performance of a service was not recorded at all

    The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200

    The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750

4 points

QUESTION 20

  1. Which of the following is the appropriate journal entry if a company performs a service and is paid immediately?

    Debit to Cash, Debit to Revenue

    Debit to Cash, Credit to Revenue

    Debit to Accounts Receivable, Credit to Cash

    Debit to Revenue, Credit to Accounts Receivable

    Debit to Accounts Receivable, Credit to Revenue

4 points

QUESTION 21

  1. Indicate whether a debit or credit entry would be made to record the following changes in each account. a. To decrease Cash. b. To increase Common Stock. c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Retained Earnings.
     i. To increase unearned revenue j. To increase dividends

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10 points

QUESTION 22

  1. Using the trial balance below: complete the income statement, the statement of retained earnings and a balance sheet.

    Johnny Dollar's Body Shop
    Trial Balance
    December 31, 2020
    Cash 6500
    Accounts receivable 475
    Body shop supplies 2500
    Office supples 600
    Body shop equipment 35200
    Accounts payable 1500
    Common stock 10000
    Retained earnings 11775
    Dividends 36000
    Revenue earned 95000
    Body shop supplies expense 3425
    Office supplies expense 775
    Rent expense 6000
    Utilities expense 4800
    Wages expense 22000
    118275 118275
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